Zen Co. sells a copier machine for $2,000. The copier cost Zen $6,000 and at the time of sale, accumulated depreciation was $2,500. Zen will record this sale with which of the following entries? Debit to Loss on Disposal of Machinery for $3,500. No gain or loss will be recorded. Debit to Loss on Disposal of Machinery for $1,500. Credit to Gain on Disposal of Machinery for $3,500. Credit to Gain on Disposal of Machinery for $1,500.

Question

Phelps

Business

18 October, 10:50

Zen Co. sells a copier machine for $2,000. The copier cost Zen $6,000 and at the time of sale, accumulated depreciation was $2,500. Zen will record this sale with which of the following entries? Debit to Loss on Disposal of Machinery for $3,500. No gain or loss will be recorded. Debit to Loss on Disposal of Machinery for $1,500. Credit to Gain on Disposal of Machinery for $3,500. Credit to Gain on Disposal of Machinery for $1,500.

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Answers (1)

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Payten Cox · Answer 1

The correct option is: Debit to Loss on Disposal of Machinery for $1,500.

Explanation:

As at the time of sale, the net book value (cost - accumulated depreciation) of the copier machine was $3,500 ($6,000 - $2,500). Then, the proceed from sale is $2,000. The full accounting entries to record the transaction will be:

Debit Accumulated depreciation $2,500

Debit Cash (sales proceed) $2,000

Debit Loss on disposal of machinery $1,500

Credit Fixed asset (cost - copier machine) $6,000

(To record disposal of copier machine)